Lesson 1 of 5 · Beginner's guide to mutual funds
What Is a Mutual Fund?
1 min read · Beginner
A mutual fund pools money from many investors and invests it according to a defined investment objective.
Instead of selecting and managing every investment yourself, you own units in a professionally managed portfolio.
How does it work?
- Investors contribute money to the fund.
- The fund invests in assets such as shares, bonds or other permitted instruments, depending on its category.
- Investors own units whose value changes with the value of the portfolio and applicable expenses.
Three things to understand
- NAV: The net asset value per unit of a mutual fund.
- Diversification: Spreading investments across different assets to reduce dependence on any one holding.
- Risk: Your investment value can fall as well as rise.
Remember: Mutual funds are not guaranteed-return products. Understand the fund’s objective, risks, costs and suitability before investing.
This lesson is for general education. Mutual fund investments are subject to market risks. Read all scheme related documents carefully before investing. Disclosures